Business Standard

NHIT to raise ~4.5K cr debt to buy 2 more road projects

- ABHIJIT LELE

National Highways Infra Trust (NHIT) is planning to raise an additional debt of ~4,500 crore to fund the acquisitio­n of two more operationa­l road projects from its parent organisati­on, the National Highways Authority of India (NHAI).

The acquisitio­n of road assets is set to be concluded in the fourth quarter ending March 31 (Q4FY24).

NHIT, an infrastruc­ture investment trust (INVIT), has proposed to acquire a portfolio of seven operationa­l road projects from NHAI against an earlier envisaged five as part of its third round of asset acquisitio­n.

The acquisitio­ns are proposed to be funded through long-term debt of ~9,000 crore (earlier envisaged at ~4,500 crore).

It will also raise equity by issuing units of an INVIT.

India Ratings has assigned “AAA” ratings for rupee term loans.

The rating reflects the right mix of operationa­l assets with long-term revenue visibility, low operationa­l risk, and backing from a strong and experience­d parent.

The estimated enterprise value of the seven assets is likely to be approximat­ely ~16,000 crore (as against the ~9,000 crore for five assets), subject to the valuation report. At present, the INVIT, through its 100 per cent subsidiary, National Highways Infra Projects Private Ltd (NHIPPL) houses eight road assets with an aggregate length of 2,544 lane km.

The proposed addition of seven toll road projects will be through another wholly owned project NHIT Eastern Projects Private

The acquisitio­n of road assets is set to be concluded in the fourth quarter

Ltd (NEPPL), the rating agency said.

The existing portfolio of eight project assets is located across Rajasthan, Gujarat, Madhya Pradesh, Uttar Pradesh, Maharashtr­a, Telangana, and Karnataka.

The diversific­ation will improve to nine states after the addition of the proposed seven road projects.

These two subsidiari­es are Special Purpose Vehicles (SPVS) with 100 per cent cash flow fungibilit­y between the SPVS.

The funds raised at the INVIT level are injected in two SPVS — NHIIPL and NEPPL — in the form of debt.

The cash flows from the SPVS will flow to the INVIT in the form of dividends, interest, and help in repayment of the Invit’s debt.

The cash flow of two subsidiari­es — NHIIPL and NEPPL — which hold all 15 road assets, would be available for servicing the debt at NHIT, the rating agency said.

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